Hastings Ups Income24 Mar, 2008 By: Erik Gruenwedel
Stringent margin management and reduced costs offset flat revenue at Hastings Entertainment Inc. in the quarter ended Jan. 31.
The Amarillo, Texas-based retail chain of 153 stores posted fourth-quarter income of $5.8 million, compared to income of $5.1 million during the same period last year.
Same-store sales (open at least 12 months) of video games in the quarter skyrocketed nearly 25% to lead all categories in the quarter, followed by in-store Hard Back Caf?, up 15%, and electronics, up 13.5%.
DVD movie sales fell 2.9% in the quarter, due to lower sales of new and boxed set releases and partially offset by sales of used product and next-generation packaged media format Blu-ray Disc.
The company said despite a greater number of fourth-quarter new DVD releases than in the previous year, the majority were sequels that did not perform as well as expected.
“The retail industry faced its weakest holiday sales period since 2002, followed by a sluggish January,” said CEO John Marmaduke, in a statement. “Retailing will be difficult in 2008 due to the state of the economy.”
The lack rental titles in the box office range of $20 million to $80 million hurt DVD rental, which fell 4.5% for the quarter to $24.1 million, compared to $25.4 million last year.
The retailer suffered another steep decline in same-store music sales (down 18.7% for the quarter) and is eliminating 15% to 20% of shelf space devoted to packaged music in 35 stores and replacing it with children's and trend product.
Gross-rental profit fell to 62.4%, for the quarter compared to 66.7% in the same period the year before. Combined same-store sales and rentals of movies and video games increased 3% and 3.4% in the quarter and full year, respectively.
Quarterly revenue topped $171 million, compared to $174 million in the same period the year before.
For the fiscal year, income topped $10.2 million on revenue of $547.7 million, compared to income of $5 million and revenue of $548.3 million the year before.
Hastings projected fiscal 2008 guidance of net income from $10.5 million to $11 million.